funding qfx for big w, page-4

Hi Oscar

Im not advocating DES entry into RMA - far from it. I think RMA and DES should be at arms length, as RMA/EzyDVD is one of DES's major retail channels (in the form of EzyDVD today, RMA/EzyDVD tomorrow as a download business).

Arguably, QFX is a channel conflict as DES sells to both EzyDVD and Video Ezy via MPH, as well as JB HiFi etc. Whilst QFX is hardly a threat to these guys - its never good to have channel conflict

Im concerned on the cash drain that QFX will have on DES going forward - and yes, Ive looked at the TESCO deal and lovefilm - but, that is now moving towards an online download version, just like WalMart and Netflix in the US.

What we are seeing is everyone exit the postal rental business - almost overnight.

My real concern is - what did Illyria (Lachlan Murdoch) see when he got into QFX, and then almost embarrassingly just as quick got out? Lachlan is no fool as his advisory team is first rate.

Not that I dont have confidence in DES management - but are they really aware of all the issues? The DES representative on the board is not ex industry - whilst QFX sound good on the surface (and their spin is fantastic) - all the numbers, international trends, Illyria etc indicate its time to go

Money that DES could use somewhere else to further its "core" strategy I think - whether its the cash tied up at present, or the forthcoming capital raise that will be looming.